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Investing is like running a marathon, not a sprint

18-10-2016 | Insight | Edith Siermann, Peter Ferket

Stability and reliability are very important to investors. We talked with Peter Ferket, CIO Equities and Edith Siermann, CIO Fixed Income, about the remarkable continuity in Robeco’s investment teams.

Speed read
  • Clients realize that corporate changes do not affect investment strategies
  • A stable strategy and performance is important for clients
  • Culture and work environment are more important that a pile of money
It was a very eventful year, with some major changes in Robeco holding company’s management team. Were clients concerned about this?
Ferket: “Yes, clients do think about it and have some questions. But the changes are happening in the management board ─ at group level. They have little effect on the investment teams. Not a single client has withdrawn their assets, and the eight who promised to deposit funds with Robeco, have all done so since the news came out. They realized it would not affect our investment strategies at all.”

Siermann: “It’s simply a case of the governance structure becoming more transparent, there will be more focus on the investing itself. And our strategy is the same as before. We’ll stick to the ambitious 2014-2018 growth plan. The restructuring is a step in the right direction.”

The investment teams didn't seem too troubled, either.
Siermann: “They are all professionals who prefer to focus on what they do best. They have proven they will not be sidetracked by secondary issues. Besides, our market is exciting, and very volatile. So it demands your full attention.”

Ferket: “Four years ago, after Rabobank sold Robeco to ORIX, there were many big changes. We weathered those well and managed to keep the teams together then too. The momentum is also strong. Products such as Lux-o-rente, High Yield and Global Credits, as well as the Conservative strategies, are doing well, which also helps.”

The stability of the investment teams is very characteristic of Robeco. What’s your secret?
Ferket: “It’s mostly down to culture and tradition. Investing is like running a marathon, not a sprint. We take a long-term view and not just with investing ─ we hire portfolio managers and analysts in much the same way. Last year, seven of our investors celebrated their 25th Robeco ‘anniversary’ ─ that surely means something; they are true Robecans. We look for people who are excited to work at Robeco. We also expect them to shoulder a big responsibility. The annual Employee Engagement Survey also showed that direct colleagues highly appreciate each other. That’s partly because team members can trust and count on one another’s expertise.”

Siermann: “It’s disastrous when people think they having nothing left to learn. We put together teams of professionals who want to keep learning, acquire new knowledge ─ who challenge each other and keep one another focused. Obviously, all the conditions have to be right, but above all, we look for people who truly are professionally driven. We have real team-based culture. That’s at odds with the star-manager approach so prevalent among asset managers in the English-speaking world. There, many people are financially driven and a hire and fire culture has evolved, with the ensuing risk of high levels of staff turnover among investment teams.”

What tangible added value does this continuity offer clients? And is there a flip side, as well?
Siermann: “It means your investment strategy is stable and therefore performance is repetitive. That’s important for clients, who want to know what exactly they’re buying. The flip side may be that teams lose their focus and reach consensus too easily. However, we avoid that by having  various team members challenge each analysis. The combination of both quant and fundamental investors also keeps the teams on their toes. There are differences in performance, which you analyze and which enhances the expertise of both teams.”

‘Robeco’s portfolio managers also have a personal life’

Ferket: “Stability is not the same as status quo. Many of our teams have expanded over the years and we always strive for diversity when recruiting new members. Not necessarily gender-wise, but more in terms of education, personality and experience. We felt that someone with a ‘red’ personality was missing from the Emerging Equities team, So you keep that in mind when you recruit a new member. That way, the team stays sufficiently motivated. Additionally, the fixed income and equity teams have been on the same floor for a few years. This has a positive effect on the exchange of knowledge and cooperation. For example credit analyses are also taken into consideration in the equity team’s decisions.”

How hard is it in this sector to keep teams together? It is not uncommon for entire teams to move from one asset manager to another, causing considerable outflow.
Siermann: “The culture and working environment are more important than a pile of money. Of course, the pay is important, but it’s not everything. If that’s your highest priority, you probably won’t end up at Robeco, anyway. It’s the big picture that counts, and pay is just one aspect of that.”

Ferket: “In the Netherlands, the whole package is good. You can make more in London, but the cost of living is much higher, too. What’s more, the workplace culture is very different. Sure, we work hard, too, but we’re not nearly as extreme as in places like London. Robeco’s portfolio managers also have a personal life.”

This interview was first published in the September edition of the Robeco Quarterly.

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